Are you looking to raise capital for your startup? If so, you should always be prepared for potential investor meetings. Approaching investors unprepared is one of the top reasons why entrepreneurs are unable to get their small businesses off the ground.
Investors have pitch meetings with different entrepreneurs regularly. The success of your fundraising efforts will depend heavily on your business plan, strategic goals and investor-ready financials.
Here are some ways you can help your business prepare for pitch meetings.
Have a Concrete Business Plan & Business Model
If your business plan is a roadmap showing investors where your company is headed, your business model is the blueprint showing how your business is going to get there. Investors will rely on these essential tools to evaluate the feasibility and lifetime value of your business.
Prepare a Compelling Story
Whilst numbers and discipline are essential, getting investors hooked on your vision will be the strongest tool in your early stage. Telling an emotionally compelling story is key to convincing your investors to participate in building your vision.
As much as investors are investing in your business, they’re really investing in you.
They want to see your ability as a founder to tell your company’s story and share your vision with those involved. This is crucial at an early stage because it’s telling of your ability to attract investors in the future or convince customers to purchase your product or service.
Know Your Market
Knowledge of your addressable market and ideal customer base are persuasive points to include in your pitch. While your idea might be great, if you haven’t done any research on your potential buyers and their willingness to pay for what you’re offering, you’ll never win over the hearts and wallets of investors.
Outline your target markets, market size, demographics and growth prospects. Devoting resources into professional market research can end up transforming your business plan.
Maintain Steady Bookkeeping
Many entrepreneurs fail to see the importance of well-maintained bookkeeping from day one. However, keeping on top of your bookkeeping is key to making data-driven decisions and understanding the financial position of the business.
If you are seeking any external funding or going through M&A, your potential funders will want to see your books as part of their due diligence process. Preparing these financials can be time-consuming and you’ll want to avoid getting them ready at the last minute.
Pro Tip: Consider outsourcing your books to a professional bookkeeping firm
If you are unable to manage your books accurately in-house, hiring a professional bookkeeping firm is a great way to ensure your books are up-to-date and reliable. They can also help you prepare cash flow projections and other financial reports that investors might want to see.
Prepare Realistic Financial Projections
While you’ll want to impress investors with your ability for growth, your projections should reflect a realistic picture of your company’s capabilities. You’ll also want to include a clear idea of the valuation of the business, the equity available and a potential exit strategy.
Pro Tip: Make sure your financial calculations are accurate!
This may seem obvious, but you’d be surprised by how many investors find inaccuracies in financial calculations. If you do not have a strong financial background, consider hiring a fractional controller to review your financial projections and provide you visibility on financial calculations such as your burn rate, customer acquisition cost, and business runway.
Be Ready For Questions
When you’re preparing your pitch, think about your audience and who you are trying to sell your idea to. Are you pitching to an angel investor, a venture capitalist firm, or a bank? Your pitches should always be tailored to the audience.
During your pitch, you should also be prepared to answer questions regarding the use of funds, your current financials and your exit goal. Answering these forward-thinking questions will reflect your confidence in the business as well as your ability to plan for the business.
On top of testing your numbers, your character will also be up for the test. Raising capital is almost like a job interview where you’ll constantly be required to prove yourself.
Always remember that while you’re pitching to emphasize the value of your business or idea, it is also important to be honest with the investor. Mutual trust is the key to building a long term relationship with your investor.
Start your Preparation Early
Fundraising can be intimidating but sufficient preparation earlier on can help ease the process. And the first step to preparing for a pitch is to have an accurate set of books.
At Enkel, we have a wealth of experience in guiding tech startups and entrepreneurs through setting up accurate, investor-ready bookkeeping systems. Contact us today to learn how we can help you manage your books so that you’ll always be ready to talk to investors.